Hamilton Hawks Players' Association and Mr. Sideline, the CEO and majority owner of Hamilton Hawks Soccer, Inc, ask your help in resolving a salary dispute. Mr. Sideline presents the following income statement to the players' representatives. HAMILTON HAWKS SOCER, INC. Income Statement $ 3,500,000 Ticket revenues. $2,500,000 Stadium rent expense 30,000 80,000 700,000 265,000 Ticket expense Promotion expense Player salaries Staff salaries and miscellaneous 3,575.000 $(75,000) Net income (loss).. The players contend that their salaries are below market and a raise is warranted. Mr. Sideline argues that the Hamilton Hawks really lose money and, until ticket revenues increase, a salary hike is out of the question. As a result of your inquiry, you discover that Hamilton Hawks Soccer Company owns 85 percent of the voting stock in Hawks Stadium, Inc. This venue is specifically designed for soccer and is where the Hawks play their entire home game schedule. However, Mr. Sideline does not wish to consider the profits of Hawks Stadium in the negotiations with the players. He claims that "the stadium is really a separate business entity that was purchased separately from the team and therefore does not concern the players. On top of that, we allocate all the ticket revenues to the team's income statement." The Hawks Stadium income statement appears as follows: HAWKS STADIUM, INC. Income Statement $2,500,000 875,000 95,000 Stadium rent revenue. Concession revenue $3,470,000 Parking revenue 270,000 90,000 410,000 Cost of goods sold. Depreciation expense Grounds maintenance expense. 970,000 200,000 Staff salaries and miscellaneous $2,500,000 Net income (loss).. Required 1. What advice would you provide the negotiating parties regarding the issue of considering the Hawks Stadium income statement in their discussions? What authoritative literature could you cite in suɔ- porting your advice? 2. What other pertinent information would you need to provide a specific recommendation regarding players' salaries?
Hamilton Hawks Players' Association and Mr. Sideline, the CEO and majority owner of Hamilton Hawks Soccer, Inc, ask your help in resolving a salary dispute. Mr. Sideline presents the following income statement to the players' representatives. HAMILTON HAWKS SOCER, INC. Income Statement $ 3,500,000 Ticket revenues. $2,500,000 Stadium rent expense 30,000 80,000 700,000 265,000 Ticket expense Promotion expense Player salaries Staff salaries and miscellaneous 3,575.000 $(75,000) Net income (loss).. The players contend that their salaries are below market and a raise is warranted. Mr. Sideline argues that the Hamilton Hawks really lose money and, until ticket revenues increase, a salary hike is out of the question. As a result of your inquiry, you discover that Hamilton Hawks Soccer Company owns 85 percent of the voting stock in Hawks Stadium, Inc. This venue is specifically designed for soccer and is where the Hawks play their entire home game schedule. However, Mr. Sideline does not wish to consider the profits of Hawks Stadium in the negotiations with the players. He claims that "the stadium is really a separate business entity that was purchased separately from the team and therefore does not concern the players. On top of that, we allocate all the ticket revenues to the team's income statement." The Hawks Stadium income statement appears as follows: HAWKS STADIUM, INC. Income Statement $2,500,000 875,000 95,000 Stadium rent revenue. Concession revenue $3,470,000 Parking revenue 270,000 90,000 410,000 Cost of goods sold. Depreciation expense Grounds maintenance expense. 970,000 200,000 Staff salaries and miscellaneous $2,500,000 Net income (loss).. Required 1. What advice would you provide the negotiating parties regarding the issue of considering the Hawks Stadium income statement in their discussions? What authoritative literature could you cite in suɔ- porting your advice? 2. What other pertinent information would you need to provide a specific recommendation regarding players' salaries?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Hamilton Hawks Players' Association and Mr. Sideline, the CEO and majority owner of Hamilton
Hawks Soccer, Inc, ask your help in resolving a salary dispute. Mr. Sideline presents the following
income statement to the players' representatives.
HAMILTON HAWKS SOCER, INC.
Income Statement
$ 3,500,000
Ticket revenues.
$2,500,000
Stadium rent expense
30,000
80,000
700,000
265,000
Ticket expense
Promotion expense
Player salaries
Staff salaries and miscellaneous
3,575.000
$(75,000)
Net income (loss)..
The players contend that their salaries are below market and a raise is warranted. Mr. Sideline argues
that the Hamilton Hawks really lose money and, until ticket revenues increase, a salary hike is out of
the question.
As a result of your inquiry, you discover that Hamilton Hawks Soccer Company owns 85 percent
of the voting stock in Hawks Stadium, Inc. This venue is specifically designed for soccer and is where
the Hawks play their entire home game schedule. However, Mr. Sideline does not wish to consider the
profits of Hawks Stadium in the negotiations with the players. He claims that "the stadium is really a
separate business entity that was purchased separately from the team and therefore does not concern the
players. On top of that, we allocate all the ticket revenues to the team's income statement."
The Hawks Stadium income statement appears as follows:
HAWKS STADIUM, INC.
Income Statement
$2,500,000
875,000
95,000
Stadium rent revenue.
Concession revenue
$3,470,000
Parking revenue
270,000
90,000
410,000
Cost of goods sold.
Depreciation expense
Grounds maintenance expense.
970,000
200,000
Staff salaries and miscellaneous
$2,500,000
Net income (loss)..
Required
1. What advice would you provide the negotiating parties regarding the issue of considering the Hawks
Stadium income statement in their discussions? What authoritative literature could you cite in suɔ-
porting your advice?
2. What other pertinent information would you need to provide a specific recommendation regarding
players' salaries?
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